Senator Mike Enzi's (R-WY) July 2007 cap-and-trade proposal

This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

Senator Mike Enzi, a Republican from the U.S. state of Wyoming, in July 2007 proposed a novel "cap and trade" arrangement aimed at phasing out tobacco. The idea is based on an arrangement that has been used successfully to address atmospheric pollutants that cause acid rain. Enzi's cap-and-trade proposal has been presented as a legislative response to a bill sponsored by Senator Edward M. Kennedy (D-MA) to allow the U.S. Food and Drug Administration to regulate tobcco.

The Enzi End-Game Proposal for Tobacco

Main premise: The size of the United States tobacco market and the negative health impacts of tobacco use must be reduced.

Background: Some have suggested that FDA regulation of tobacco is the way toward safer tobacco products, but we know that there is no such thing as a safe cigarette. Proposals to have FDA regulate tobacco are a misguided attempt to force a deadly product into the regulatory structure developed for drugs and devices – products which DO have health benefits. This new scheme for tobacco would be very costly, and would not result in much of a health benefit.

Furthermore, FDA review and approval of tobacco products sends a terrible public health message - creating the sense that cigarettes are safe or can be made safer, when we know they cannot.

Importantly, the (Kennedy/Waxman proposal to allow FDA to regulate tobacco) under consideration by the Health, Education, Labor and Pensions (HELP) Committee explicitly states that the FDA will not be permitted to ban nicotine or tobacco. That is not true regulation. The bill would gut the authority that Congress has bestowed and staunchly defended for the FDA -- the authority to remove health threats from the marketplace. The FDA cannot be put in the position of approving a product which years of science and the personal experience of far too many Americans has shown to be dangerous. Simply put, tobacco kills people. We can do better.

We should focus our efforts instead on helping people quit using tobacco, or better yet, to never start. The Enzi proposal would have a dramatic impact on the number of smokers in this country. It would close loopholes in the law that tobacco companies have exploited and enjoyed for far too long. It would also use proven approaches to help people quit and implement tried and true prevention programs.

The centerpiece of the Enzi proposal is a novel cap-and-trade program for tobacco production, shrinking the size of the tobacco market over the next 20 years. The cap-and-trade program would require cigarette makers to meet specific user level limits by specific deadlines. The plan would set up a market share allocation and transfer system in which allowances could be used, banked, traded or sold freely on the open market.

Enzi proposes that this scheme would guarantee that fewer people suffer the deadly consequences of smoking, while providing flexibility in how those reductions are achieved. In addition, small tobacco companies would have a valuable asset in their allocations, leveling the playing field a bit between the smaller and larger industry members.

Cap-and-trade programs have a proven track record in the environmental arena, particularly in addressing acid rain. The tobacco plan is based on the successful program in the Clean Air Act Amendments of 1990. This system achieved the desired results faster and at lower cost than had been anticipated. The same can be done for tobacco.

Bill summary:

Title I: Raising the bar on our knowledge

• Removes an outdated provision that allows manufacturers to shield from the government which ingredients are in which tobacco products.

• Modernizes and standardizes testing methods for measuring and reporting nicotine, tar and carbon monoxide in cigarettes and smokeless tobacco.

• Strengthens warning labels on packages – changes to bold warnings with color graphics – a strategy that has been proven to work in the EU and Canada.

Title II: Determining who uses tobacco

• Consolidates multiple overlapping surveys on tobacco use to gather the necessary data to monitor the baseline and reductions under Title III.

Title III: Reducing the number of tobacco users

• Creates a cap-and-trade program to reduce the adverse health effects of tobacco use through reductions in annual size of the US tobacco market from 2006 levels.

• Requires compliance by tobacco manufacturers with specific user level limitations by specified deadlines.

• Sets up a market share allocation and transfer system. Allowances can be used, banked, traded, or sold freely on the open market.

• The number of allowances decreases each year, ultimately resulting in fewer than 2% of the population using tobacco, versus nearly 21% today – a 90% reduction.

Title IV: Increasing the tobacco excise tax

• Increases the tobacco excise tax based on the relative risk of products (see Title V for information on risk classification).

• Distributes the revenue as follows: 50% to Medicare, 25% to Medicaid, and 25% to tobacco control and prevention. This maintains the tight link between tobacco tax policy and tobacco health policy.

Title V: Encouraging tobacco control and prevention, and smoking cessation

• Establishes an FDA panel to classify tobacco products or groups of products by risk.

• Gives FDA explicit authority to ban nicotine.

• Creates a program of counter-advertising, conducted by HHS, and funded from the 25% for control and prevention in Title IV.

• Closes a loophole in Medicare and Medicaid to provide coverage for smoking cessation, regardless of whether the beneficiary has a diagnosed smoking-related illness.

• Enhances the Federal match under Medicaid for states that meet the CDC recommended levels of MSA funds spent on tobacco control and prevention.

Related articles

• Farquhar, B.Enzi offers new tobacco idea Casper, Wyoming Star-Tribune, July 25, 2007